Software error costs trading company about $440 million in 45 minutes

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Imported from previous forum

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On Wednesday, a computer software error at Knight Capital Group snowballed into some mayhem in the American stock market. Knight Capital uses algorithmic trading, where stock transactions are controlled by computers rather than people, and a glitch caused that system to make unwanted purchases and sales for 30 minutes.

It took 45 minutes to figure out the problem, and today Knight Capital said the error led to a pre-tax loss of about $440 million. That’s a very pricey mistake, costing nearly $10 million per minute. Knight Capital’s second-quarter revenue this year was just $289 million, so the algorithm issue may drive it out of business.

Read full article at :-

http://www.techgig.com/tech-news/editors-pick/Software-error-costs-trading-company-about-440-million-in-45-minutes-14217

More related news :-

After the Knight Capital Catastrophe, Throttle the Traders, Not the Markets

http://www.forbes.com/sites/frederickallen/2012/08/10/after-the-knight-capital-catastrophe-throttle-the-traders-not-the-markets/

Regards,
K. Mahesh

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Has CFTC, SEC, OFR probed this? Or any university work? The e-mini s&p 500 Flash Crash was well examined. Lots of interesting things there, especially multi agent modeling during contagion.